I'm a Fellow at the Adam Smith Institute in London, a writer here and there on this and that and strangely, one of the global experts on the metal scandium, one of the rare earths. An odd thing to be but someone does have to be such and in this flavour of our universe I am. I have written for The Times, Daily Telegraph, Express, Independent, City AM, Wall Street Journal, Philadelphia Inquirer and online for the ASI, IEA, Social Affairs Unit, Spectator, The Guardian, The Register and Techcentralstation. I've also ghosted pieces for several UK politicians in many of the UK papers, including the Daily Sport.

Apple Does Not Have More Cash Than Britain And Israel Combined

This is a little boo boo from the New York Times. They’re talking about the restrictive hiring practices case in Silicon Valley that was recently settled. The civil case part of it that is, not the criminal part that was settled a couple of years ago. And it’s obviously true that the no competitive hire aspects of the case were a cartel, were illegal and should have been punished. I personally think that the combined companies got off very lightly, much too lightly. But that’s just background to the mistake that the NYT has made here. Which is to claim that AppleApple has more cash than Britain and Israel combined.

Apple has more than $150 billion in the bank, eclipsing the combined cash reserves of Israel and Britain.

The first and most obvious point is that Apple doesn’t actually have $150 billion in the bank, just doesn’t have $150 billion in cash. We can check this by looking at Apple’s latest 10-Q, on file at the SEC. With a bit of rounding we can see that Apple has $18 billion of cash and cash equivalents and all of the rest of their “cash pile” is in short and long term marketable securities. And “cash equivalents” aren’t cash either, in that number we’ll find things like commercial paper and the Treasury equivalent.

OK, so we can dismiss that as a bit of a quibble if we like for those marketable securities can be turned into cash. But then so can Apple itself be turned into cash: they could issue more stock any time they felt like it and gain more cash. So it is a difference with a point to it, even if a minor one.

But we can and should take this further. For even if we accept the point that Apple has $150 billion in what we might regard as something very like cash it is absurd to compare that with the cash holdings of two governments that have their own central banks. For both Britain and Israel the true amount of cash they hold is something in between almost all the money in the world and infinite. For they have the power to issue more of their own currency (something that Eurozone governments do not for example). This is not just a matter of printing more banknotes which they can both do, their only constraint being that enough people must be willing to accept them that they can afford the ink and paper to print them (this is a real world constraint. Zimbabwe has to stop printing Z$ when the notes they were printing could no longer be used to purchase the ink with which top print them). They also have the ability to create as much electronic money as they might wish. This is, after all, exactly what quantitative easing has been over these past few years. Make more electronic money and go buy stuff with it.

So trying to claim that Apple has more cash than people who create their own cash has a certain logical problem to the claim.

And finally we can get a bit weirder. A very large proportion of that $150 billion that Apple has is in the form of (mostly US Treasury) notes, bills and bonds. If we are to count that as being cash on the Apple side then clearly we would have to count it as negative cash from the other side of the same ledger. Thus, if the US Treasury has, imagine, $15 trillion of debt out there (roughly right although not exactly) then we must assume that, if when Apple owns it it is cash then when Treasury owes it it is negative cash.

And yes, both Britain and Israel have large outstanding debt issues. Meaning, that by this definition then the two countries have negative amounts of cash.

So, depending upon what levels of sophistication we wish to reach in our arguments we can say that all of us, even those with only a $ to our name, have more cash than those two governments, or that given that they can make as much money as they like no one can possibly have more than them, or that Apple doesn’t because it’s holdings aren’t actually in cash.

About the one thing we can’t say in any realistic sense is that Apple has greater cash holdings than Britain and Israel combined, simply because it doesn’t. For even I find that third argument about governments having negative cash a little esoteric.

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